Samil Pharmaceutical is targeting to start operations at its Vietnam eyedrop plant in the second half of this year. It is a large-scale facility on a 7,500-pyeong site that can produce 330 million eyedrops a year.
To that end, Samil Pharmaceutical prepared for GMP (good manufacturing practice) approval and other steps, posting a 22.2 billion won loss on a consolidation basis last year. Why is it pushing ahead with operating the Vietnam plant even at the cost of losses?
A Samil Pharmaceutical official said, "Vietnam's economy is growing and its pharmaceutical market is expanding," adding, "We can secure price competitiveness through local production with low labor costs."
Korean pharmaceutical companies and bio corporations are stepping up efforts to break into emerging markets. Vietnam, Brazil and India, which have large populations and high medical demand, are representative examples. These countries have seen consumer spending power grow, but their medical and healthcare systems have not developed accordingly, making them rise as new markets. The industry expects this will be an opportunity to move beyond a domestic market that has been dampened by drug price cuts.
◇ Conducting clinical trials for antiviral treatments and establishing a healthcare center
Vietnam is called a land of opportunity among Korean pharmaceutical companies and bio corporations. Since COVID-19, interest in health has increased, and as the elderly population grows, pharmaceutical consumption is rising rapidly.
On the 1st, according to market research firm Statista, Vietnam's pharmaceutical market is expected to grow from 7 trillion won in 2023 to 9 trillion won in 2029.
Korean corporations are taking varied approaches. They provide differentiated medical services that have been hard to experience until now, or they develop treatments tailored precisely to local conditions.
GC opened an artificial intelligence (AI)-based health screening center in Hanoi, Vietnam. It can analyze 14 major cancers and some 30 lifestyle diseases within two hours. The healthcare center was established as a joint venture with Vietnam's Phenikaa Group.
Hyundai Bioscience is conducting clinical trials in Vietnam on a candidate substance, Zeffy, that is effective in suppressing viruses. Vietnam sees more than 400,000 dengue fever patients each year, and Zeffy targets treatment for dengue fever, among others. Hyundai Bioscience plans to obtain approval and supply the treatment if there are no issues with the clinical results. To that end, it signed a business agreement with Vietnamese pharmaceutical company Vefaco for drug distribution.
◇ Showcasing biosimilars in Brazil… assembling medical device parts in India
Brazil, the largest pharmaceutical market in Latin America, is also emerging as a strategic stronghold. Brazil's pharmaceutical market is forecast to grow from 41 trillion won in 2024 to 55 trillion won in 2028. Local demand for biosimilars is high, and the Brazilian government is streamlining approval procedures for biosimilars.
Celltrion has introduced the hives treatment OMLYCLO, the blood cancer treatment Truxima, and the autoimmune disease treatment Remsima in Brazil.
A strategy of penetrating the pharmaceutical market starting from the raw material stage is also possible. Brazil relies on imports for 95% of its active pharmaceutical ingredients.
HK inno.N said that its plant in Eumseong County, North Chungcheong Province, obtained GMP certification in Brazil at the end of last year. It can supply tegoprazan, the active ingredient in the third-generation gastrointestinal drug K-CAB. Kolon Life Science's plant in Chungju also received GMP certification in Brazil for active pharmaceutical ingredients for hyperlipidemia treatments.
India has large regional disparities in healthcare, and the government offers benefits such as tariff reductions and preferences in public tenders for domestically produced products. Huons Group's medical device affiliate Huons Meditech decided to produce endoscope disinfectors in India for these reasons.
Huons Group signed a contract with India's Vasu Group to assemble parts locally. Yoon Sung-tae, chairman of Huons Group, has shown strong interest, even attending the completion ceremony for the assembly production line recently held in India. A Huons Group official said, "Because parts are assembled locally, there are advantages such as shorter delivery times, quick after-sales service, and flexible inventory management."
◇ "Beyond the United States and Europe, toward diversification"… responding to drug price cuts, reshaping revenue structures
Korean pharmaceutical companies and bio corporations previously focused on advancing into the United States and Europe. Recently, strategies have shifted toward emerging markets.
Lee Jae-guk, vice chairman of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA), said, "Not only in the United States and Europe but also in emerging markets, the environment allows for the creation of stable revenue structures."
Pharmaceutical policies in emerging markets are also favorable. According to the Korea Bio Association, inspections of pharmaceuticals, biopharmaceuticals and APIs, or GMP certifications conducted by the Ministery of Food and Drug Safety can be recognized in Brazil.
Lee said, "Because pharmaceuticals affect health, import standards have to be stricter than for other manufactured goods," adding, "With government-level quality control and public-private cooperation, trust in K-pharmaceuticals has been established."
There is also analysis that, with generic drug price cuts looming in Korea, corporations have little choice but to focus on entry into emerging markets.
An industry official in pharmaceuticals and biotech said, "Measures are needed to maintain profitability in response to drug price cuts," adding, "If it is difficult to have prices recognized domestically, increasing the share of overseas markets such as emerging countries could be one way."